Why Shares of Skyline Champion Soared on Wednesday

What happened

Shares of Skyline Champion (NYSE: SKY) climbed 13.9% on Wednesday, after the manufacturer of modular homes reported quarterly results that suggest the company is performing well following a major acquisition last year.

Continue Reading Below

So what

On Tuesday after the markets closed, Skyline Champion reported fiscal fourth-quarter earnings of $0.26 per share on revenue of $327.7 million, beating the $0.20-per-share consensus earnings estimate despite falling short of the $344.22 million in expected sales. The company was created last June through a merger between Skyline and Champion Enterprises, which created the nation's largest publicly traded factory-built-housing company.

Net sales in the quarter grew 23% year over year, and U.S. sales led the way with 35% growth. Skyline Champion reported both a 15% increase in total number of U.S. transactions and a 17% increase in average selling price, as a result of strong demand and favorable product mix. In Canada, sales fell 17% because of a decline in homes sold.

This is Skyline Champion's second straight quarterly beat.

Now what

CEO Keith Anderson, on a post-earnings call with investors, said the manufactured-housing market in recent years has grown faster than the broader housing industry. He added that the company expects growth to continue into the new fiscal year:

Skyline Champion ended the quarter with a backlog of $143 million, down slightly from $155 million a year prior, but the company says the current total is higher quality because it doesn't include inflated orders for lower-margin Federal Emergency Management Agency residences.

Based on the stock reaction, investors seem to believe Skyline Champion is building on a solid foundation.

10 stocks we like better than Skyline ChampionWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Skyline Champion wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of March 1, 2019

Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.